Unemployment, GDP, and Inflation Quiz

The unemployment rate is interpreted as the percentage of the: A) Work force that have been laid off. B) Labor force that are not employed. C) Adult population who are unemployed. D) Able-bodied population who are not working.

B) Labor force that are not employed.

Most economist agree that the immediate cause of the majority of cyclical changes in the level of real output is changes in the: A) Rate of inflation. B) Level of total spending. C) Rate of unemployment. D) Stock market price indexes.

B) Level of total spending.

The GDP deflator or price index equals: A) Real GDP divided by nominal GDP. B) Nominal GDP divided by real GDP. C) Gross private domestic investment less the consumption of fixed capital. D) Gross national product less net foreign factor income earned in the United States.

B) Nominal GDP divided by real GDP.

The inflation rate measures the percentage growth of: A) Real GDP from one year to the next. B) The CPI from one year to the next. C) Real GDP from the base period 1982-84 to a given year. D) The CPI from the base period 1982-84 to a given year.

B) The CPI from one year to the next.

Net exports is a positive number when: A) A nation's exports of goods and services fall short of its imports. B) A nation's exports of goods and services are increasing. C) A nation's exports of goods and services exceed its imports. D) A nation's exports of goods and services to other nations.

C) A nation's exports of goods and services exceed its imports.

When oil and energy prices rise, the economy tends to experience: A) Unanticipated inflation. B) Demand-pull inflation. C) Cost-push inflation. D) Natural inflation.

C) Cost-push inflation.

Unemployment that occurs when there is a deficient demand for the good and services of an economy is called: A) Natural unemployment B) Structural unemployment C) Cyclical unemployment D) Frictional unemployment

C) Cyclical unemployment

For a given amount of nominal income, the real income will: A) Fall if the price level falls. B) Rise as the price level rises. C) Fall if the price level rises. D) Be affected if the price level falls.

C) Fall if the price level rises.

Full-time homemakers and retirees are classified in the BLS data as: A) Unemployed. B) Employed. C) Not in the labor force. D) Part of the labor force.

C) Not in the labor force.

Nominal GDP differs from real GDP because: A) Nominal GDP is baed on constant prices. B) Nominal GDP results from adjusting for changes in the price level. C) Real GDP results from the adjusting for changes in the price level. D) Real GDP is based on current prices.

C) Real GDP results from the adjusting for changes in the price level.

Inflation is a rise in: A) Unemployment over time. B) Real GDP over time. C) The general level of prices over time. D) The standard of living over time.

C) The general level of prices over time.

Which of the following is the correct way to calculate the unemployment rate? A) [(unemployed)/(population)]• 100 B) [(labour force)/(unemployed)]• 100 C) [(unemployed)/(labour force)]• 100 D) [(labour force)/(population)]• 100

C) [(unemployed)/(labour force)]• 100

If the GDP gap is positive, then: A) Actual GDP is greater than potential GDP. B) Potential GDP is greater than actual GDP. C) The unemployment rate is rising. D) The inflation rate is falling.

A) Actual GDP is greater than potential GDP.

In calculating the unemployment rate, part-time workers are: A) Counted as employed because they are receiving payment for work. B) Counted as unemployed because they are not working full-time. C) Treated the same as "discouraged" workers who are not actively seeking employment. D) Used to determine the size of the labour force, but no the unemployment rate.

A) Counted as employed because they are receiving payment for work.

Core inflation refers to the inflation picture after stripping away the: A) Food and energy prices. B) Service-sector prices. C) Government-regulated prices. D) Capital goods prices.

A) Food and energy prices.

To avoid multiple counting in national income accounts: A) Only final goods and services should be counted. B) Primary, intermediate, and final goods should be counted. C) Both final and intermediate goods and services should be counted. D) Intermediate goods and services should be counted.

A) Only final goods and services should be counted.

For a person to keep his real income steady at a certain level from one year to the next, his nominal income must: A) Rise as fast as the price index. B) Rise is the price index falls. C) Stay the same as the price index rises. D) Fall if the price index rises.

A) Rise as fast as the price index.

Official unemployment rate statistics may: A) Understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment. B) Understate the amount of unemployment by excluding part-time workers in the calculations. C) Overstate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment. D) Overstate the amount of unemployment by including part-time workers in the calculations.

A) Understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment.

GDP is the market value of: A) Resources (land, labour, capital, and entrepreneurship) in an economy in a given year. B) All final goods and services produced in an economy in a given year. C) All output produced and accumulated over the years. D) Consumption and investment spending in an economy in a given year.

B) All final goods and services produced in an economy in a given year.

An example of intermediate goods would be: A) Cars bought by a car-rental company. B) Bricks bought by a homeowner for constructing a patio. C) Paper and ink bought by a publishing company. D) Sacks of groceries bought by a dentist for his family.

B) Bricks bought by a homeowner for constructing a patio.

The recurrent ups and downs in the level of economic activity extending over several years are referred to as: A) Business startups. B) Business cycles. C) Economic phases. D) Noncyclical fluctuations.

B) Business cycles.

Which of the following statistics can turn negative?: A) CPI B) Inflation rate C) GDP D) Unemployment rate.

B) Inflation rate

The best example of a "frictionally unemployed" worker is one who: A) Reduces productivity by causing friction in a business. B) Is in the process of voluntarily switching jobs. C) Is discouraged and not seeking work. D) Is laid off during a recessionary period in the economy.

B) Is in the process of voluntarily switching jobs.

Inflation caused by an increase in aggregate spending is referred to as: A) Cost-push inflation. B) Anticipated inflation. C) Hyperinflation. D) Demand-pull inflation.

D) Demand-pull inflation.

A trough in the business cycle occurs when: A) The natural rate of unemployment is at a minimum point. B) The inflation rate is at its lowest. C) Cyclical unemployment is at a minimum point. D) Employment and output reach their lowest levels.

D) Employment and output reach their lowest levels.

In calculating the unemployment rate, "discouraged" workers who are not actively seeking employment are: A) Treated the same as part-time workers. B) Used to determine the size of the labour force. C) Included as part of the unemployed. D) Excluded from the labour force.

D) Excluded from the labour force.

Gordon is a person who sells narcotics "on the street." This type of illegal activity: A) Is estimated and included in the GDP figures. B) Causes GDP to be overstated. C) Would be considered double counting in calculating GDP. D) Is excluded from GDP figures.

D) Is excluded from GDP figures.

Which phase of the business cycle would be most closely associated with an economic contraction?: A) Trough B) Recovery C) Peak D) Recession

D) Recession

Kevin has lost his job in an automobile plant because the company switched to robots for its welding step in the assembly line. Kevin plans to go to technical school to learn how to repair microcomputers. The type of unemployment Kevin is faced with is: A) Frictional B) Natural C) Cyclical D) Structural

D) Structural

A distinguishing characteristic of public transfer payments in that: A) They include the cost pf maintaining public parks. B) They involved no contribution to current production in return. C) They include wages to government workers. D) They are counted as part of the government purchases in the calculation of the gross domestic product.

D) They are counted as part of the government purchases in the calculation of the gross domestic product.